While Alberta’s energy companies struggle, this sector is undergoing a ‘renaissance’

Alberta's petrochemical sector is seeing a boost from cheap feedstocks, low labour costs and incentives from the provincial government

By Elizabeth Hames

May 11, 2016

NW Refining’s Sturgeon refinery near Redwater, Alberta Paul Swanson

While Alberta’s energy sector has undoubtedly suffered from low oil and gas prices, the cheap feedstock is providing a boost to the province’s petrochemical sector, along with help from lower labour costs and government incentives.

Neil Shelly, executive director of Alberta’s Industrial Heartland, says he is beginning to see renewed interest from companies looking to invest in the area, where much of the province’s hydrocarbon processing occurs. That includes a commitment from Pembina Pipeline and Kuwait-based Petrochemicals Industries Company to undertake a feasibility study for a propane dehydrogenation (PDH) and plyporoylene upgrading facility in the area.

“We’re enjoying a bit of renaissance right now with some of the lowest natural gas 3:02 and propane and other prices in the world,” Shelly says. “We’re attracting attention from companies all over the globe looking at investing in our area.”

Neil Shelly explains how the Heartland got its start

In addition to low feedstock prices Shelly credits government incentives, such as $500-million royalty credit program designed to spur investment in the petrochemical industry, with increasing interest in the area.

“Companies that have come in in the past have looked around Alberta, they’ve asked what the government does with regard to incentives or programs and we really haven’t had any up until recently,” Shelly says.

But one of the biggest drivers of Alberta’s petrochemical renaissance is falling labour costs, Shelly says. When oil prices were at their height and investment in the oil sands was rampant, Shelly was hearing from potential investors that Alberta was one of the most expensive markets in which to build a major hydrocarbon processing plant. But Shelly says he’s hearing from companies that construction costs are falling considerably with the slowdown upstream.

Listen to the full interview with Neil Shelly on Alberta Oil‘s Energy Ink podcast. Find it on iTunes.